India’s luxury real estate sector has climbed the ladder to emerge as the darling of investors. Products in this niche segment are not just confined to the realm of providing security and high returns to wealthy customers, but successfully deliver on the promise of luxury, comfort, well-being and opulence.
The precipitates of the pandemic have left positive traces and the outlook for the market has changed. Today’s discerning customers are not hesitant to invest more in a luxurious lifestyle that secures them a coveted address in the most elegant neighborhoods. The segment is posting phenomenal growth not only because of the political interventions needed in these volatile times, but mainly because of the rising aspirations of wealthy Indian buyers.
High traction in the luxury housing market has put the segment on an uphill climb and this is well reflected in industry reports. According to Anarock numbers, this segment represented 12% of total sales in the first quarter of 2022, compared to 7% in the first quarter of 2019.
UHNIs, HNIs, including business leaders, startup founders, industry stalwarts, corporate bigwigs, working professionals, and NRIs have actively purchased luxury properties to reap the benefits of market shock absorbers, like low interest rates, high disposable income, stamp duty cuts, favorable policies. support, among others.
Feelings are flying high, and they are confident like never before. A survey by Sotheby’s International Realty indicated that a large number of HNIs are proposing to buy luxury properties in the next two years, indicating that the luxury housing market will become more resilient in the coming quarters, which is promising.
Policy support, transparency, credibility, trust and transformation in the buyers market first
In recent years, the Indian real estate sector has strengthened its image to emerge as a customer-centric or buyers-first market. This has been made possible largely by much-needed policy support and measures like RERA that have made the market more transparent, credible and profitable.
Wealthy clients in the niche luxury housing segment engage in high-value transactions, and with transparency at the forefront, investors and even the undecided are accelerating their decision-making processes.
Similarly, the residential real estate sector has been quick to transform adversaries into opportunities in the pandemic. Timely government support with stamp duty cuts, low interest rates and favorable tax policies acted as catalysts supporting the sector despite obstacles.
The Central Bank’s decision not to raise the repo rate was perfectly timed and made the sector more resilient to the shocks of the pandemic. Recently, the Reserve Bank of India increased the repo rate to deal with inflation; however, it is expected to have a minimal impact on the sentiments of buyers of homes in the luxury segment.
Growing interest from HNIs and trends driven by the pandemic
The growing interest from HNIs and NRIs has been the biggest driver of demand in India’s luxury real estate market. These affluent buyers who aspire to residency among like-minded people in posh settings are ready to go the extra mile to invest in their dream properties that match their opulent lifestyles. This group of influential buyers is well exposed to global benchmarks and wants similar amenities in their residential spaces. Luxury residential spaces loaded with sleek interiors, contemporary designs and superior amenities are perfectly suited to their demands and that’s why as many as 67% of HNIs said they were willing to invest in a residential space in 2022, according to a survey of Sotheby’s.
Additionally, the pandemic has made NRIs realize the value of investing in their homeland. Here, India’s growing economic stature globally coupled with transparency and growth in the real estate market have turned the tide in favor of luxury homes. NRIs are investing heavily and opting for luxury homes for good returns or even as their retirement settlement plans.
Since the pandemic, prospective home buyers are carefully examining factors related to sustainability and their well-being before making a purchase. Technology has been another enabler of growth and has accelerated high-value transactions in this segment. The work of home culture and learning of model houses have made buyers realize the importance of spacious houses.
They stay indoors for extended hours and seek homes equipped with dedicated workspaces, study rooms, gyms, entertainment areas, private gardens, terraces or balconies, and other ultra-modern amenities for hassle-free living.
A great opportunity is coming for established developers
Current market conditions and sentiments have ushered in an opportune time for credible brand developers with a proven track record. Today, they are in a better position and have gained a larger market share. They are perfectly capturing the demands and delivering the high level of quality and trust to the customers.
With fears of the pandemic fading, their sales have improved, resulting in strong balance sheets. The luxury housing market has become resilient due to his contributions to making the segment more customer-centric.
These developers are well placed in terms of liquidity, having raised funds through equity and monetization of land and commercial assets. In the coming days, your improved position will keep the market profitable, attract more investment and funds for growth.
Going forward, the luxury housing market is set to see tremendous growth as buyer demand reaches stratospheric heights. The increase in sales and supply are already promising and encouraging and will boost the morale of the major market players to dole out new offerings to cater to this high end market.
The shift towards a healthy lifestyle, the need for world class amenities and the desire for a luxurious lifestyle coupled with future security have increased the value of this segment and promising results will be seen in 2022.
(By Amar Sarin, CEO and MD, TARC Ltd)